2012 New York Sales Tax Summary

2012 NEW YORK SALES TAX SUMMARY: Construction related issues

1. Temporary Facilities on Construction Sites:

In August 2012, the Department issued its first Advisory Opinion regarding temporary facilities on construction sites since being instructed that its interpretation of the applicable regulation was incorrect. The Tax Appeals Tribunal had previously ruled that the correct interpretation, or test, to be applied was whether or not the temporary facility was a necessary prerequisite to the construction of a capital improvement to real property. This decision put to rest the Department’s incorrect interpretation of limiting capital improvement treatment only to installations of temporary heat, plumbing, electric and protective pedestrian walkways.

In the August 2012 Advisory Opinion, the Department applied the correct test to a number of temporary facilities installed on construction sites. The Department stated that items such as scaffolding, safety netting and hoisting systems that are similar to elevators could qualify as temporary facilities that are part of the capital improvement to the real property. The Department stated that items such as mobile scaffolding and cranes would still be looked at as taxable rentals or purchases of construction equipment.

The Department advised that contractors installing qualifying temporary facilities should obtain an ST-124 Certificate of Capital Improvement from their customers.

2. Electronic Transfers of Drawings:

The Department issued two Advisory Opinions in 2012 regarding whether or not transferring drawings electronically constituted a taxable transaction. The Department stated that retail sales of tangible personal property are taxable. Items such as sketches, paintings and drawings that are corporeal in nature are considered tangible personal property. Drawings that are transferred electronically, such as PDF files, with no accompanying corporeal format are not tangible personal property and are not subject to sales tax.

3. Transportation of Construction Vehicles and Equipment:

A New York construction equipment vendor was advised that when it enters into a taxable rental agreement with a contractor and it delivers the equipment to a jobsite or transports between jobsites, the delivery and transport charges are part of the taxable rental price. Although the transportation of tangible personal property is not, by itself, a taxable service, the delivery charges were incidental to the rental of the equipment and therefore included in the taxable contract price.

4. Exemption for Sale and Installation of Commercial Solar Energy Systems Equipment:

New York recently adopted a sales tax exemption for retail sales and installations of commercial solar energy systems equipment. The exemption applies to “arrangements or combinations of components” installed on commercial properties that “utilize solar radiation to produce energy” for heating, cooling, hot water or electricity. The exemption does not cover equipment that is part of a non-solar energy system. Contractors are advised to use the ST-120.1 Contractor Exempt Purchase Certificate to make the qualifying purchases.

5. Portable Toilets as Capital Improvement:

Charges for portable toilets and related services will not be treated as capital improvements to real property. Nuff said.

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